“It takes us a few minutes to price up a bucket of more than 500 bonds,” said Mazi. “Without the technology we deployed, it would otherwise take line traders days.”
But shifting single-name bonds may still be better done by humans, especially when they are dealing in a crisis that’s outside of the data set programmed into computers.
And portfolio trades don’t work in a vacuum. At the worst of March’s pandemic-rocked sessions, some banks switched off pricing algorithms, according to Stuart Campbell, head of trading at Bluebay Asset Management LLP, which oversees more than $59 billion.
“On volatile days, those claims go out of the window,” he said. “Portfolio trading is not a silver bullet to the lack of liquidity.”
Tradeweb’s competitor MarketAxess Holdings Inc. said it doesn’t publish data on portfolio trading volumes. Bloomberg LP, the parent company of Bloomberg News, competes with Tradeweb and MarketAxess in providing fixed-income trading services.
The technology isn’t just for sell-side traders trying to execute lightening-fast deals. At London-based Muzinich & Co., fund managers use portfolio trades for complex transactions that combine purchases and sales -- a process that can take up to two weeks and requires human intervention.
“You still make the decision on what should be bought and sold, and transaction costs are cheaper,” said Tatjana Greil Castro, a portfolio manager at Muzinich & Co., which oversees $33.5 billion. “I like it.”
This article was provided by Bloomberg News.